Sharing future salaries to fund degrees

Addressing current trends and the pressing issues facing education, the first day of the WISE Summit 2019 saw participants debate on the relevant topic of funding through Income Share Agreements between companies and students.

The debate, titled Resolved: College students should sell a share of their future salaries to fund their degrees, brought together four speakers from varied backgrounds to share their thoughts on income-sharing and whether it is a beneficial scheme.

With much of the burden of fees and education loans being placed on students, income-sharing is a supportive concept and must be encouraged, according to Archika Dogra, Student, Interlake High School, US, who was speaking for the topic.

“Where does the burden of education fall? A lot of it falls on students. Students get stuck in the cycle of debt. Income-sharing should be an option for everyone. This shifts the burden of the loan from the student to the organizations,” Dogra said.

Income Share Agreements (ISA) have emerged as a solution to the dramatic accumulation of student debt, particularly in the US. Instead of taking loans, students pledge a percentage of their future salary, where payments are linked to the graduate’s employment. This ensures they are not burdened by debt if they do not manage to find a job quickly.

Some of the best universities in the US have chosen to become affiliates of ISA.

Dogra, a WISE Learners’ Voice fellow, and her colleague Julien Barbier, CEO and Co-founder of Holberton School, presented the benefits of supporting ISAs.

“Loans often discriminate against those from low-income backgrounds. It is not a feasible option always for everyone. What an ISA does is that it increases accessibility to education. Instead of debts through loans, students can pay through salaries – which is a better way to approach higher education. As a student you don’t get stuck in a debt cycle,” Barbier said.

The fact that there is a gap that exists in the courses students enroll in, and the jobs they eventually obtain, was highlighted by the opposing team.

“An Income Sharing Agreement is not a future career development plan. It just pays for your education in high school or college, but it won’t get you a job in the areas you’re studying,” said Bola Lawal, CEO and Co-Founder, ScholarX.

Lawal highlighted that he has seen companies stop part payment for education resulting in an unfortunate situation where students are not able to continue financing their courses.

“You might get all the money, but if you’re not performing well as a student, and eventually in your job that paid for your education, how does the company benefit from this agreement,” asked Lawal’s teammate Carmina Bayombong, CEO, InvestEd.

The audience engaged with the panelists challenging them with interesting questions on their views.

A representative from an income-sharing company in Rwanda in the audience noted, “Students prefer to take loans as it’s a reliable source, but for those students who have higher family financial burdens, they pick income-sharing agreements.”

The session ended with an audience poll, with 57 percent voting in favor of the topic.